May 4, 2025

Inside a Texas Architecture Firm with $1.3M Revenue, But No Profit

Money Memos is a series that reveals the finances behind real architecture firms, 100% anonymously. Want to be featured? Submit your Money Memo

May 4, 2025

Inside a Texas Architecture Firm with $1.3M Revenue, But No Profit

Money Memos is a series that reveals the finances behind real architecture firms, 100% anonymously. Want to be featured? Submit your Money Memo

May 4, 2025

Inside a Texas Architecture Firm with $1.3M Revenue, But No Profit

Money Memos is a series that reveals the finances behind real architecture firms, 100% anonymously. Want to be featured? Submit your Money Memo

Here's a behind-the-scenes look at a 50-year-old architecture firm in the Central Texas, as told by one of the 2 active partners. The firm has 8 employees and focuses on retail and industrial projects.

Office Situation:

We rent and pay market rate (about $1/SF/mo) for an older suite with lesser amenities.

Salary:

Partners are compensated $10k - $12k per month, plus a tax escrow, which is market rate in our area according to the AIA Salary Calculator.

The pay is the same as being a managing employee last year vs managing partner this year (I've been Partner for 5 months). Except, as a Partner, I have to wait a couple weeks for the clients' checks to clear before I can take my distribution.

Work/life balance:

Early in my career, I found myself constantly pushing a playground swing on Sunday mornings while hammering out details with a big client. I eventually established boundaries around my working hours.

I lost the client, but he respected me more and enthusiastically sent me great referrals.

Debt:

Switching the company from sole proprietorship to partnership incurred debts of about 10% of our annual billings.  Having a line of credit helps take some of the panic off the monthly budgeting.

We found a no-fee card with about 1% cash back from Truist.  $25K line of credit was significantly more than anyone else. We pay certain regulatory fees and consultants on the card, so this was important.

Revenue & Profit:

Over the last 12 months, we've generated about $1.3 million in revenue.

Gross revenue remains constant but the percentage of consultant fees edges up as the project sizes get smaller. We need to find a way to charge more for our services, or increase the monthly volume.

As far as profit goes, we're not there right now.

Best Expense:

Our clients flip out when they see the erasable pen.

#1 Financial Goal:

We've been in the same suite for almost 50 years.  I would love to move to one of our newer buildings or communities to showcase the work of our current generation.

Biggest Mistake:

Our local printshop stopped offering embossed lithography business cards, so we ordered regular cards and lost a senior designer over it. We found a printshop in another city to fill the next order.

Book Recommendations:

I used to have a role playing game with pages of elaborate spreadsheets of how to budget all the expenses of an imaginary military unit. Running a business is kind of like that, except on a good day we need fewer explosives.

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